The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that no excise duty is leviable on clearances made to two projects through main contractor Bharat Heavy Electricals Limited (BHEL).
M/s Thermopads Private Limited., (Appellant) are engaged in the manufacture of various items like heat tracers, storage tanks etc. The Appellant had submitted Project Authority Certificates, letter issued by the Ministry of Power regarding the status of MPP for these two projects and also certificates issued to them by BHEL as a sub-contractor to the main contractor i.e. BHEL for supply of goods.
However, on perusal of the documents, it was observed by the Department that the Project Authority Certificates were not issued by the prescribed Authority i.e. Chairman and Managing Director of NTPC as required under Condition No. 86(b) of Serial No. 400 of Customs Notification No. 21/2002-Cus dated 01.03.2002. Therefore, it was felt that the Appellant failed to provide necessary certificate, duly signed by the Competent Authority, and accordingly a Show Cause Notice demanding duty of Rs. 8,88,913/- was issued to the Appellant along with proposal to impose penalty.
The counsel on behalf of the Appellant has argued that the requirement of the Customs Notifications are required to be complied with only when the goods are imported to India but not when the domestic goods are supplied (deemed export) under relevant Central Excise Notification, unless the said Central Excise specifically calls for the compliance of the conditions under Customs Notification also. He has relied on the wordings of condition 19 of Notification No. 6/2006-CE dated 01.03.2006.
It was also emphasised that the sub-contractors are also entitled for the benefit of the same notification, which exempts contractor from the payment of Central Excise duty, subject to amendment in the contract before supply or subsequent to supply. He has also relied on various case laws in support of argument that in the given circumstances, they were entitled for the benefit of Notification No. 6/2006-CE.
A Two-Member Bench comprising Anil Choudhary, Judicial Member and AK Jyotishi, Technical Member observed that “Thus, there are sufficient documents on record to prove that the Appellants were not required to pay any duty and were clearly entitled for benefit of Notification No. 6/2006. The reliance placed by the Appellants on certain case laws cited supra also support this view that when there is substantive compliance, even in case where such certification is by a person other than designated authority, benefits cannot be denied.”
“Therefore, in the facts of the case, they are meeting the criteria for availing the exemption under Notification No. 6/2006. Accordingly, no duty is leviable on clearances made to these two projects through the main contractor M/s BHEL. Since the duty is not leviable, the penalty is also not imposable on the Appellants” the Bench concluded.
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